The opinion of the court was delivered by: BRODERICK
The Defendants in this case are the subjects of a forty count indictment filed on May 9, 1996 charging them each with one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 371, twenty-seven counts of wire fraud in violation of 18 U.S.C. § 1343, twelve counts of engaging in unlawful monetary transactions in violation of 18 U.S.C. § 1957, as well as aiding and abetting these offenses in violation of 18 U.S.C. § 2.
The indictment in subject-case alleges that from January 1990 through January 1992, the Defendants, operating through a company known as Turnbull & Sons Ltd. ("Turnbull"), engaged in a scheme to defraud individuals seeking business loans. The indictment alleges that the Defendants falsely represented to individuals seeking loans that they had the resources to assist them by providing full collateral in the form of letters of credit issued by major U.S. banks. The indictment alleges that the Defendants fraudulently collected advance fees from the individuals seeking loans, the Defendants never provided the promised collateral for any loans, and the Defendants did not return any advance fees which they collected on the basis of their fraudulent representations.
As heretofore pointed out, Alan Turner represents Defendant Mersky in subject-case. In 1991, Mr. Turner represented Morris Chucas in connection with a civil lawsuit filed in 1991 against Chucas by a company named N.V.R. Limited Partnership, NVR v. Chucas, No: 5622, Jan. Term 1991 (Court of Common Pleas of Phila. County). Chucas is a Defendant in the criminal proceedings before this court and is currently represented by Thomas Carroll, Esq. On October 17, 1996, Chucas entered a plea of guilty before this court to all counts in the indictment. In his guilty plea agreement, Chucas "agrees to testify as a witness before any grand jury, hearing, or trial when called upon to do so by the government." The Government has represented to the court that it intends to call Chucas as a government witness at trial.
The 1991 civil lawsuit in which Mr. Turner represented Chucas involved a transaction in which NVR sought the return of $ 7,500. from Chucas. NVR paid Chucas an advance fee of $ 7,500. in connection with Chucas' representations to NVR that Turnbull would assist NVR in obtaining a letter of credit in the amount of $ 7,5000,000. The court has reviewed the docket entries of NVR v. Chucas which show the following: On January 4, 1991 NVR filed its complaint against Chucas. On January 18, 1991, Mr. Turner entered his appearance on behalf of Chucas in the Court of Common Pleas of Philadelphia. An answer to NVR's complaint was filed on February 4, 1991. On April 10, 1991, Mr. Turner withdrew as counsel for Chucas and Chucas, at that time a member of the Pennsylvania bar, proceeded to represent himself pro se in the case.
Mr. Turner represented to the court during the October 30, 1996 hearing that his representation of Chucas in relation to the 1991 civil action was limited to preparing and filing an answer to NVR's complaint, and that he does not recall any confidential communications with Chucas other than the information which appears in the answer to NVR's complaint.
The Government represents that NVR is one of the victims of the Defendant's fraudulent scheme alleged in the indictment. As heretofore pointed out, the Government has represented to the court that Chucas will be a government witness at trial. Accordingly, Chucas will be subject to cross-examination by defense counsel Alan Turner. The conflict of interest arises in that Mr. Turner is prohibited by the attorney-client privilege from disclosing any confidential communication made to him by Chucas while Chucas was obtaining legal advice and assistance concerning the 1991 NVR civil case. As the Third Circuit has stated: "The attorney-client privilege covers 'confidential disclosures by a client to an attorney made in order to obtain legal assistance.'" Haines v. Liggett Group, Inc., 975 F.2d 81, 94 (3d Cir. 1993). The attorney-client privilege belongs to Chucas, the client, and only he may waive it. Id. at 90.
During the course of the hearing on October 30, 1996, Thomas Carroll, Esq. represented to the court that Chucas was willing to waive the attorney-client privilege with respect to any confidential communication he may have made to Mr. Turner during the course of Mr. Turner's representation of him in the 1991 NVR civil case. Two days after the hearing, however, the court received a letter from Mr. Carroll which stated:
At the conflict of interest hearing on October 30, 1996, I communicated to the court the position of my client, Morris L. Chucas, that he would waive the attorney-client privilege with respect to his communications to his former attorney, Alan Turner. I also communicated Mr. Chucas' position that he consented pursuant to Rule 1.9 of the Rules of Professional Conduct for Mr. Turner to represent an adverse interest.
Mr. Chucas contacted me a few minutes ago to advise that he has given further reflection on the subject. He has now decided that he does not wish to either waive the privilege or consent to representation of an adverse interest.
In light of Chucas' representation that he will not waive his attorney-client privilege with respect to any confidential communications he made to Mr. Turner concerning the 1991 NVR civil case, this court finds that there exists a serious potential for a conflict of interest in that Mr. Turner is precluded from revealing any confidential communications made to him by his former client, ...